Erstwhile mechanical engineer and Forbes Executive Editor, with MBA from NYU. In 15 years at Forbes I covered large corporations, money managers and self-made wealth builders---and the myriad trials they all face. Joined the tech-startup ranks in 2014 as co-founder and CFO of Eyes/Only, a luxury-experience portal for high-net-worth individuals. If the mood strikes (and especially if you have a tasty-tequila rec), please send your thoughts to brett@eyeson.ly.

What Would You Give To Be In The 1%?

With another holiday in the books and the daily grind again upon us, this is a good time for the following thought exercise: Imagine, if you can, that every waking hour, of every waking day, you were working.

Maybe not doing paperwork, or laying bricks, or serving coffee, or grading essays, or repairing hard drives, but still working: solving problems, fielding calls, making decisions—big ones, potentially involving many millions of dollars and thousands of jobs.

Maybe you’re at your boy’s baseball game, your sister’s wedding, your Dad’s funeral or your granddaughter’s birth. Maybe you’re on the slopes or on the waves. Or maybe you’re lying in bed, at the edge of a dream.

But no matter where you are or what you’re doing, you’re on call—come hell or worse.

Sound like fun?

Welcome to life as a fat cat. Not the idle, trust-fund feline, but the seven-figure guy or gal who flies first class, wears perfectly tailored suits (or $300 jeans) and has a gold-plated health plan, among other trappings—all while millions of Americans pound pavement for work.

To hear the pundits, politicians and protestors tell it, fat cats are one of the planet’s most reviled species, barely above the cockroach but well beneath the snake. Their reason, above all: Fat cats make far more money than working stiffs. CEOs, for example, make roughly 260 times more than the average worker. That’s a big gap, and it’s grown bigger over time.

A common defense for the explosion in fat-cat compensation is that the companies they run have exploded in size along with their paychecks. One study by Xavier Gabaix (of MIT) and Augustine Landier (NYU) points out that the six-fold increase of CEO pay between 1980 and 2003 is “fully attributed” to the six-fold increase in market capitalization (number of shares times share price) of large US companies.

That’s a clean but insufficient explanation. As someone who gets paid to understand why people make a living in business and why they don’t, I can’t help notice an often ignored yet crucial aspect of the income-inequality debate: sheer sacrifice.

On Call

Caveats first, and they’re huge. For starters, not everyone has access to the same education (and the powerful established networks that come with it). Second, not everyone is equally talented. Third, not all industries command the same premium: Software coders and mutual fund managers will always earn more than baristas and cosmetics clerks. And fourth, as George Packer astutely and exhaustively outlines in the November/December 2011 issue of Foreign Affairs (see A Broken Contract), deep-pocketed corporate lobbyists have gradually tilted the scales in Congress over the last 40 years.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

While having a residual income would be attractive – and a life of luxury – my ambitions are certainly not to be in the top 1%.

A nice cottage by the ocean, or maybe a little house next to a river or lake, and a ten year old Mercedes Benz or BMW, broadband internet connectivity are really the only “luxuries” I’d ever dream for.

I’ve already got a very wealthy life – my fiancee is beautiful, good job prospects – I for one like and enjoy working and being productive – and while I have very few assets, I am not in debt. To me, this is more important than being wealthy by bank balance – my life is “rich” in other ways.

This does not make me unambitious. My ambitions are to have children one day, and therefore we’ll need income to support them.

The one percent maybe have capital. They maybe have assets. They maybe hold power. But in this land of the free, liberty and independence – and the ability to improve one’s life is still achieveable.

As long as I continue to buy assets, and avoid liabilities, I’m pretty sure that while I won’t ever be in the 1% I’ll still remain free of debt and be independent.

FYI, I entered USA *legally* on a K1, getting married on the 9th of Jan to a wondeful American girl (I’m from Scotland), will be *volunteering* at a local school until my Adjustment of Status comes through, and feel I am so lucky to have been given the opportunity to live and work in this country.

I walked past the #occupyportland (Maine) protest yesterday – it was outside the City Hall where we were picking up our marriage licence (I’d just picked up Charlotte from her work at school) – it was quite odd. While I can see the point in legally protesting – it just doesn’t seem to have a practical outcome (i.e. narrowing the gap between the 99% and 1%).

Maybe if these long term protestors were to work, or volunteer (I can only legally volunteer because of the visa requirements) they would have a richer life, as I can’t quite see the point of living under canvas and putting a few posters up! However, I respect their rights as long as no violence occurs. I don’t know, maybe “Arbeit macht frei”?

“…inequality will continue to mock the American promise of opportunity for all. Inequality creates a lopsided economy, which leaves the rich with so much money that they can binge on speculation, and leaves the middle class without enough money to buy the things they think they deserve, which leads them to borrow and go into debt. These were among the long-term causes of the financial crisis and the Great Recession. Inequality hardens society into a class system, imprisoning people in the circumstances of their birth—a rebuke to the very idea of the American dream.”

Some people just don’t get it. We don’t deserve anything in this Life, Life itself is a gift, it’s up to us to earn everything we desire. Deserve shows his entitlement mentality, which is not common among the wealthy. “If they could, the would; since they can’t, they rant.”

Nobody forces the middle class to go into debt, those are individual decisions. If Mr. Johnson wants to compete with Mr. Smith, then he should subscribe to a different mental model: Create not Compete.

Nobody is imprisoned to the circumstances of their birth – certainly not me. Some people mistake the American Dream for possessions, it’s an opportunity to pursue your passion and make a difference.

Finally, a fair piece. I am not in 1% but there’s something to reading all the articles of outrage about income disparity without a hint of acknowledgement around what these folks (1% ) have on line. Their quality of life is low, stress level extremely high and some frankly are just talented, smart people who deserve to be highly compensated.

Isnt a fair, balanced view as much an american view as opportunity is?

How is their quality of life low? They don’t need to worry about money. They don’t need to do menial tasks for themselves, like cooking dinner or driving to work, except when they feel like it. In the workplace, they’re surrounded by people who do what they say when they say it. They have leeway about the sort of work they do, the choice to delegate undesirable tasks to underlings, their pick of fun and interesting projects.

I know lots of talented, smart people who sacrifice a great deal for their work, and are in fact on call 24/7. When the server crashes, their phones go off, and they get their butts down to work, and stay there until it’s fixed, regardless of what they had planned or how long it takes.

Do they earn $9M/year? No, not even a tiny sliver of that. They do it because they know how important the services they’re providing are. They do it for the feeling of mastery, the ability to use their cleverness to make something work and work well. They do it because it’s work they enjoy, work that makes them happy. And they feel very well compensated, despite not making six figures.

Police and firefighters frequently make decisions that put their personal safety on the line. Doctors and nurses work long hours and make terrifyingly important decisions every day. Where is their seven-or-eight-figure compensation?

And stress? Okay, let’s talk about stress. Imagine the stress a CEO feels when deciding whether to go ahead with a merger. He knows that the entire business may depend on making the correct decision. He knows that jobs are at stake. But he also knows — if he’s a CEO worthy of the job — that he’s got enough stashed away that he and his family will never starve. College is paid for. Health insurance isn’t a problem.

Now let’s plunge down to the other end of the career ladder. Imagine the stress of being a Wal-Mart floor worker, one who has just been dressed down by her supervisor for not folding the jeans correctly. She has just been humiliated, insulted, and warned that she could be fired over a trivial, stupid thing.

Think about what losing her job actually means to her. Think about not being able to make rent. Think about having the heat and electricity and phone shut off. Think about her landlord pounding on her door, calling her names, threatening to bust in and throw her stuff out into the street. Cuz God knows, she’s thinking about it hard.

Will a limo take her home to help her unwind? Will someone be on call to cook her a meal and draw her a bath? Will her other CEO friends find her a vice-president position at one of their companies if she gets thrown out of this job?

Talk about a low quality of life and a high level of stress. The stresses you can’t walk away from are always, always worse than the ones you take on voluntarily. The CEO could choose to stop working tomorrow. The Wal-Mart worker? She has this sort of work to look forward to until the day Social Security kicks in, and she’s not sure she’ll be able to kick back even then.

Another way to look at it: Back in 1980, the average CEO made about 40 times what his — yes, almost always “his” — average employee did. They had telephones, so they were already on call 24/7. There is no reason to believe that running a company today takes any more “sacrifice” or “talent” than it did back then. Yet those jobs were filled, and in fact eagerly sought after. So the fact that the ratio has shot from 40x all the way up to 500x, when it’s obvious that CEOs would eagerly accept the lower wages, tells you not how much their work is worth but how broken the compensation system is.

A third way to look at it: Say that I came to you with a job offer. Imagine I said, “You will do interesting and engaging work, surrounded by people whose skills and dedication you admire, and who admire you in return. You’ll have to put in lots of hours, though. Name your price, and if I find it acceptable, you’re hired.” Who in their right mind would risk an opportunity like that by saying, “nine million a year, plus stock options?”

I’d feel audacious asking for $100K. Because I would want that sort of work. When I’m engaged and interested, it doesn’t feel like work at all. Any income beyond food and rent feels like gravy.

I work in one of the top consulting company…where i found very weird thing that…working hours are 9 although but on the name of client people much more than that with the hope of getting promoted( company has got great growth plan for its emplyoees) in future.

Working beyond 9 is fine sometime but not always…but one it comes for always then it become curse…i know this is not that much great that one may get indulged this much.

I am not from rich family but just that can justify losing life on the name of joining 1% group…

I don’t say it’s bad to join 1% group…if one is really serious than one must look for other ways where he is more close to life or at least he is working in his highly interested domains.

Unfortunately, this has come the culture of most of the organisations…

Income inequality is simply about fear…fear is what separates the 1% of leaders from the 99% of followers in America…a leader is not afraid to think as he will and speak as he thinks both in his personal life and his work in the marketplace…a follower is consumed with fear and paralyzing doubt making him subject to the slavery of a 9-5 job for a paycheck just to survive…the sad result of three years of Barack Obama is that the fearful 99% are forgetting the words of Franklin Roosevelt…”the only thing we have to fear is fear itself”

The fact is that no matter how hard or long someone works, their position in life was more than likely determined by their parents’ position in life. Aside from those rare birds who do make their own way up, most people will have the same or lower standard of living compared to their parents.

“Movin’ on up”, as George Jefferson put it, is far less likely today than ever and the chances are shrinking every day.

I just have to laugh at your implied assertion that the 1% are the only folks who are ‘on-call 24/7′.

The majority of Road Warrior/Service Personnel that you’ll see boarding the plane before everyone else – those folks who have Crack-Berries stapled to their hips, who spend more time in hotels than their own homes – Those guys (one of whom used to be me) are the guys that your 1% call at any time (day or night) to really solve the problems you call out in your article.

We do get a premium for this 24/7 on call, but it’s on the order of 15% to 20% more than our peers who sleep in their own beds. Hardly the huge salaries that you seem to feel the 1% are entitled too.